Outsourcing Statistics: 23 Facts and Trends
Is outsourcing a trend or fad? Read on for the current facts and figures on job outsourcing.
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Outsourcing helps companies stay competitive in the job market. U.S. jobs that are outsourced are in the millions. This means each year, thousands of jobs are given to workers overseas.
How does this affect the U.S. economy? And how do Americans feel about outsourcing?
Let's look at the facts.
Outsourcing Trends
Here is a broad overview of outsourcing.
How many jobs are outsourced by the U.S. each year?
Pinning down the exact number of jobs that are moved overseas each year is difficult. It's estimated that 300,000 positions are outsourced annually.
How do Americans feel about outsourcing?
The average citizen takes a less than positive view of outsourcing. 80% of Americans say increased outsourcing has a negative impact on American workers. Furthermore, an estimated 9% are worried that their companies will outsource jobs overseas.
How many employers want to quit outsourcing?
Outsourcing's popularity among major companies is evident. But about 20% say that they are planning to move back to their home turf. For reasons such as:
- Low-quality service
- Heightened control
- Unattained savings
Why do companies outsource?
Cost reduction is the biggest reason why companies relocate jobs overseas. In fact, 70% cite cost reduction as the number one reason for outsourcing.
Does outsourcing save companies money?
Sixty-two percent of companies that depend on outsourcing to lower their overhead say that it's been an effective strategy to reduce costs by 10% - 25%. While 38% claim that outsourcing helped in reducing costs by up to 40%.
What's the global outsourcing industry worth?
Outsourcing is big business. It's estimated that worldwide, the industry is worth $245.9 billion in 2021. IT and telecommunication accounted for the largest share, with a revenue share of 34%.
What do companies dislike about outsourcing?
While outsourcing can save money, it's not without certain drawbacks. Nearly 50% of employers that outsource say the quality of their service providers and a reactive versus proactive attitude are the most frustrating issues to deal with.
How much does the average outsourced worker make?
Wages for outsourced workers vary widely by industry and by the country where they're employed. In the manufacturing industry, for example, Chinese workers make an average of $5.51 per hour, compared to $27 for U.S.-based employees.
How big is the freelance outsourcing economy?
The Internet has made it possible for just about anyone to become a freelancer these days. And in the U.S., there are 59 million freelance workers. It's estimated that the global online workforce generates between $1 and $2 billion annually.
What tasks are least likely to be outsourced?
Eighty-nine percent of companies say they wouldn't outsource strategic planning functions. Nearly 80% don't plan to outsource sales or marketing jobs.
Outsorcing by Industry
Outsourcing rates vary by industry, with some sectors utilizing foreign workers more than others. Here is how often outsourcing occurs across several of the most prominent fields.
How common is outsourcing in the IT industry?
About 54% of outsourcing providers cover IT services. Making the IT industry the most commonly outsourced segment of the outsourcing market.
How prevalent is outsourcing in the banking industry?
Almost 40% of help desk positions in the banking industry are held by outsourced workers. More than a third of jobs in payroll and benefits administration are also occupied by remote workers.
What about insurance?
Outsourcing is less common in the insurance field. But certain tasks are more likely to be turned over to overseas workers. Nearly a third of application development processes are outsourced. Along with a quarter of IT and payroll functions.
How many customer service positions are outsourced?
Approximately 22% of companies in the outsourcing industry are involved in customer service. This places the customer service industry among the top five most commonly outsourced industries.
Do companies outsource call center positions?
Forty-three percent of companies outsource call center management positions to workers in other countries. This trend is expected to grow. 23% of employers say they plan to outsource call center employees in the future.
How often are legal tasks outsourced?
Outsourcing is becoming more common in the legal industry. 11% of companies employ foreign workers to take on legal tasks.
Outsourcing to Asia
The majority of outsourced positions are held by Asian workers. Let's look at which countries account for the largest share of outsourced jobs.
Which Asian country do employers outsource to the most?
India has become a hotspot for outsourcing.
- 59% of employers worldwide employ Indian workers.
- 22% of companies say they have plans to move at least some of their operations to India or would consider doing so.
- From 2016 to 2017, the country contributed 55% to the global services sourcing market.
Which sector is most likely to outsource to India?
In recent years, India has become the preferred destination for IT positions. India holds approximately 65% of all outsourced IT jobs. The IT business process management industry accounts for 45% of the total services exported by the country.
Which Indian city sees the most outsourcing activity?
Bangalore ranks as the number one city for outsourcing in India, followed by Mumbai. Delhi and Chennai also make the top five.
How popular is China for outsourcing?
China ranks as the second most popular destination for outsourcing. 36% of companies relocate jobs there. In fact, the market size of China's outsourcing industry rose to about $175 billion in 2020. It has an estimated 10% annual growth.
How many jobs are outsourced to China?
Between 2001 and 2013, 3.2 million U.S. jobs were lost or displaced in favor of Chinese workers. Approximately 2.4 million of those jobs were in the manufacturing sector.
Which state loses the most jobs to Asian outsourcing?
California has suffered the biggest losses in connection with Chinese outsourcing. More than 564,000 Californians saw their jobs moved overseas between 2001 and 2013. Texas came in second, with more than 304,000 jobs lost.
Which Asian countries are the least popular for outsourcing?
Singapore, Kazakhstan, and South Korea ranked 38th, 39th, and 41st, respectively. The location assessment is based on:
- Financial attractiveness
- People skills and availability
- Business environment
- Digital resonance
Bottom Line
Many companies choose to outsource positions due to lower costs. But many times they regret doing so. One of the many factors is a lower quality of work.
Among the most outsourced industries are:
- IT
- Call Center
- Human Resources
- Manufacturing
Generally, outsourcing can be quite beneficial for companies. But for American workers, it simply means fewer jobs.
Sources and References
Rebecca Lake is a journalist at CreditDonkey, a credit card comparison and reviews website. Write to Rebecca Lake at rebecca@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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